Selvaag Bolig ASA

Welcome to the third quarter's presentation for Selvåg Bolig. My name is Olav Selvåg, and I am the head of control in Selvåg Bolig. I am here today to briefly introduce a new leader. We have had a leadership shift in Selvåg Bolig in the past. this quarter, and that is not connected to any drama. I am here to introduce Sverre Moldvik, who has been appointed as new administrative director in Selvåg Bolig. Sverre has long experience from the industry and 10 years of experience in Selvåg Bolig, and has had several roles and a broad experience from Selvåg Bolig. We have also, in this context, made another change in the management, so that Øystein Klungland has become the vice-administrator in the company. I think we have will be very good. We will be both more effective and more competitive today, but also well positioned for the coming time and the competitive picture we see in the coming years. With that, I was just going to give the floor to Sverre Målveig and hand over the baton to Jan.

Thank you for that, Ola. For orientation, I will run the entire presentation alone today, since I do not have a new CFO in place yet. We will start with some highlights, operational and financial, before we look at the market conditions in our markets, and finally how we look at the future and Q&A. Q3 was a good quarter. We sold better than in over a year. Sold housing for over 900 million. The good sales also contributed to us getting good building starts, more than in several quarters. Building started then housing for a value that exceeded the finished with 330 million. Increased pipeline in other words. We also have good strong margins, which we have had for several years, and we continue to do so, and that is very positive. I will not go into the key figures now, since I will go through them in detail in a moment. Yes. The sale, we sold 178 houses for a value of 910 million, which is the best since Q2 2019. A little higher unit prices than what we have seen in the last quarter. And we have sold 484 houses this year. which is good, especially considering that Q1 and Q2 were quite affected by corona. Quite a low sale. We have also continued to have a good sale now in Q4, actually in the same pace as we have had in Q3, so that is good. The 12-month rolling is also an increase in revenue to 3,151 per year. Positive, also in terms of the number of units, slightly higher than the 12-month rolling in the previous quarter. The good sales have meant that we have managed to start up far more homes than we have done in the last two quarters. So we start up almost as many in the quarter as we finish, 196 against 212, which means that we increase our order sign, that is, the sales value of 1,300 production, up from over 300 million to 6,660. This is positive. These will be the results in the future. 77% of this was sold at the beginning of the quarter, and more now. 99% of this is in the Stor-Oslo or Østland area. It just shows a little what the potential is if we get speed on Stavanger, Bergen and Trondheim again. If we look at the future results, we are guiding at 691 units out of the year. This is in line with what we said last quarter. Out of this, we had sold 86% at the beginning of the quarter and more now. We have sold, or we are also guiding on the completion of 867 units in 2021, which is a significantly higher number than this year. So we are very pleased with that. If we look at the numbers starting with the results after IFRS, we delivered 212 units per quarter. 18 of these were from cooperating companies. We also had other revenues, 16 million, mainly plus service revenues and rental revenues. The total revenues ended up at 706 million per quarter. The unit revenue per unit is slightly lower, and this is due to the fact that we had delivered a block in Lønnskog with 157 units with relatively small or low unit revenue, that is, low unit revenue per unit. The project costs ended up at 562 million som forutsatt. Som jeg pleier å si, vi er gode til å kontrollere prosjektene våre. Prosjektlederne våre er flinke til å kontrahere og estimere kostnaden i prosjektene og ha back to back i forhold til det vi selger videre til kundet, så det blir så å si aldri noen endringer i entreprisekost. Slik at vi som regel har lavere kostnad da vi salgstarter et prosjekt i Our calculations estimate costs when we complete the project, rather than what we assume when we start it. That is to say that we increase the margin along the way. Of these costs, there were 26 million that were financial costs linked to these delivered units. The second cost, 64 million, is mainly income and sales and marketing costs. This time it is 7-8 million lower than in the same period last year. This is mainly due to lower sales and marketing costs. For several years now, we have reported an adjusted EBITDA. We do this to get this significant financial cost element, which is part of the project costs after IFRS. By doing this, we get an earnings before interest. A real EBITDA, we mean. It ended at 128 million kvartal. Earlier it was a margin of 18%. Result per share, 1.10 kroner per kvartal. Running calculation. Our industry reflects value creation best through ongoing calculations. Ongoing calculations include both sales and completion in the projects. While in IFRS, you get 100% of the results when you deliver the housing to the end customer. Then you take out from the start of construction to completion quite a linear result and turnover after ongoing calculations. It ended at 707 million in the quarter, with a margin of 21%, up 2% compared to the previous quarter. The 12-month rolling turnover after the current calculation is 3,330, which is usable year-round, in line with what we have previously sold, a margin of 21%. On the cash flow, we had an incoming balance of 6.79. Negative cash flow from the operation at 2.67. This is mainly due to an increase in customer demands, which I will return to. The investment activity was positive at 2.30. The financing part is negative at 82, due to a large increase, partly reduced with an increase in loans. The starting balance is 361 million. If we look at the balance for the rest, we had booked equity out of the quarter at 23.20 kroner, corresponding to an equity share of around 35 percent, slightly lower than from last quarter. This is due to the fact that we paid a large exchange rate greater than the result of last quarter. The second change in the goods storage is flat. I come back to the customer orders. It went up with 387 million, because we delivered a block at the end of the quarter, and the money came in first in Q4, or in October. The cash is down with 317, which I was talking about. The advance payment for the customers made it 333 million, and in the second quarter the interest rate went up again. If we look at the goods storage, the value of the goods storage is down by 109 million, due to the fact that we have started building well in the quarter. And goods in operation is up by 94 million, high activity, building activity. The finished goods are also flat, up by 13 million, on a low level, so to speak. If we look at the yield, it is the same as before. The margin picture is the same, or rather the margin is the same, but Nibor has gone down, so it is profitable in that way. We have not raised any top loans in the quarter. The empty loan in the housing itself is unchanged. Likewise, the empty yield or loan to Urban Property is unchanged. Byggelånen er noe høyre enn i forrige kvartal på grunn av at vi ikke har gjort opp gjelden på denne blokken som ble overleverd til slutten av kvartalet. Så egentlig er det veldig likt kuto hvis man korrigerer for det. Total rentebærende, netto rentebærende, gjelder på 2,5-10%. The return on equity in the quarter ended at 17%, as you can see from the one-time effect of the urban property sale. If you include that, it is at 51%. I have gone through this value chain, the last 5-6 quarters. I will do it a little faster again. It illustrates quite well how our values increase from purchase to delivery in the end. That is to say, how values are created in the company. We often buy a unit, an empty one, on a calculation that gives a technical degree of 10%. Then we do things with it through our value chain. We take down apartments, try to get a frame allowance. With an effective building according to our standard frames, we end up with a 3% margin jump, usually. or average, and we contract exporters or competitors, enterprise costs, and we predict 60%, then the margin goes up another couple of percent. Then we start building, turn up the prices through the construction period, and solve the reserve, and eventually end up with another 3%, and that is on average, in a flat market, 18%. As I usually say, if the market is positive otherwise, it will increase. If it is down, it will end up with a lower margin. In this quarter, on a 12-month rolling basis, it is at 26%, which is far higher than what we are guiding. We are very pleased with that. If we look at the market, we have... If we look at the Oslo market first, and look at the supply and demand side, first and foremost, if we look at the demand side, there is a prognosticised need in Oslo now, Until 2023, about 3,400 homes this year. That is the need. What will be completed in the next three years is estimated by the ECON to be 2,400, 1,800 and 1,350, respectively. That is, far below what is needed. It has been completed in the last 13 years, 3,000 homes per year in Oslo. That means that too few new homes will be built, or too few homes will survive, in relation to the needs in Oslo, which will of course increase prices, as you will soon see. Not only in Oslo, but also in the municipalities around Oslo. I don't know what to say. On the supply side, how the development has been this year, at the end of the year, there were approximately 1,700 homes. 800 new homes have been put out in Oslo over the course of the year. There have been sold twice as many as have been put out. That means that the stock of new homes, or what is available to new homes in the market today in Oslo, is almost halved in relation to the entrance of the year. This creates a price pressure, which is positive for Selvåk. This means that our prices go up. This is also reflected in the old Akershus. If we look at Viken, Eks, Buskerud and Østfold, the old Akershus, We see the same trend there. 3,400 homes in this year. There are 1,744 new homes, where we have put many of them. 2,400-ish sold. That means that now 2,800 homes are available there. Same trend. Downcoming supply side. The demand is the same or increasing. This is positive for us and the sales market in this area. If we look at Bergen, Trondheim and Stavanger, A positive trend compared to what it has been in recent years is that it is sold more than, or at least as much as what is sold, so it is quite flat. But that is positive, it has been an increasing trend for a long time, so we will see how it is eaten up, this warehouse. But it is a positive trend in these cities where we are big. It will be exciting to see if this trend continues. If we look at other markets in Oslo, there are record sales. Back in 2008, there were record sales of year-to-date on the used side in Oslo, in relation to the number of turnover units. We also see that goods storage is not record low, but it is not that far away. It is now coming down to very low levels from not very high levels. So here it is again, we see the trend, also fewer used houses in the market. So both fewer new houses and fewer used houses in the market, and less regulated, will be a huge pressure. Look at Bergen, the annuance market. Here, too, a record number of houses have been converted. Here, too, the stock market is down, but more down to what has been more average levels, because it comes from a high level. But also positive for us, a positive trend. Trondheim has been converted a lot. It is also on an average level, but still a little down compared to the last three years. And the Stavanger market is perhaps the most positive way I see it. We have had a very large stock market for many years now. Now it really looks like it has taken a chunk down and is beginning to approach a reasonable level. When that is said, there are as many new houses out there, for example in Trondheim, Bergen and Stavanger, roughly, as they do in Oslo, just to illustrate where the supply side is in Oslo. So, what happens when you have low wages and low unemployment, and most people have homes that we operate within, and a low supply side, then the price goes up, of course. And now we are close to 10%, or 8.5% now, year-to-date price growth in Oslo. I think it will continue upwards. That's positive for us, and it's a lot of projects in the pipeline in this market. We have already put out, if we look at the second half of the year, we have put out a project on Skåreløka, Skåresletta in Lønnskov, Skårer Plus, as we call it. That's our concept, which we'll get back to. We launched 70 units a few weeks ago, and have sold 50 in fact, so that is a plus concept that is well received. It is also a concept that proves that you can sell quite a lot in one area. We already have two other projects out in the same area, which are more ordinary houses that we usually sell. Then we have our Plus concept, which is another offer, where we also sell for a lot higher prices than the neighbouring projects. We have 1,000 units to sell at Lønnskog Stasjonsby. We have also managed to sell 700-800 houses at Skårløka. We have 1,000 units to sell at Lønnskog Stasjonsby, alongside Snø. We will launch a new project in January. We have launched a new project in Langhus, Trinn, with a good sales start, which we did last week. Already sold 33% of the new Trinn we launched. These were just a few examples. We have a lot to say. We also have a lot to say in Stavanger, Bergen, and hopefully Trondheim soon. We have a regulation act there that we expect to get through soon. As the market is there, we really have enough to offer. Here you can see an article, Selvåg Bolig Plus, how it was taken into account. We released our Plus project in Lønnskog for the first time. There is no sufficient offer there, and that was taken very well into account, as this article says, and we sold very well at the start of sales. We also have a new plus project that we are going to put out in the vicinity of Snø on Lønnskog station town in the course of next year. Landås, which is a project we have in Asker, is already in progress with 180 units, after that also plus we made out about a year ago. Yes. Other projects that will come in the future are under the regulation of the Innsenveien, which is actually the supporting projects that we have already built on Saturday. It is a joint venture company, 50-50. It will be about 350 units. We expect sales to start in the course of 2021. Lørnvangen is our old headquarters. We expect to be able to start sales in 2021, depending on the speed of regulation, but we really hope so. Or at least it will be early in 2022 in that case. Then we have the big project we own with MON out in Fornebu, which is moving forward. The municipal share plan has been adopted. We expect and hope that we will start selling in 2024. It depends of course on how the construction is done with the T-Bahn out there. They will have a station area under our property. So we hope that it goes as fast as possible so that we can get started as soon as possible. It is a very exciting project. Bjerke is another exciting project that we work well with Oslo Municipality, PBE, to get to a regulation as soon as possible there. It says that we will The sales start is estimated at 24. I hope before. It is about 1,200 units. A very nice project in an area that fits Selvogoli very well. So if we look at the future, we are in a very good position. We have a lot of projects in the Storoslo area, where we are the largest. We are very positive about the market in the future. We believe there will be pressure on prices in the areas we operate in. We also believe that there will be improvement in Bergen and Stavanger. and Trondheim, especially Bergen and Stavanger. Stavanger in particular, because they have come to such a low level and have been down for so long. So there is not much to do to make it a little better. In terms of macro images, we believe With the low interest rates and what we can offer with an average price of 5 million, it will soon be good for us. We have seen that before. The interest rates are so low now as well, and they will probably be relatively low in a few years. We also have a large empty bank in the areas we operate in, so we can be very positive about the long-term picture. So both market-wise, what we can offer, and macro, is actually in place. So it helps, of course, we have to see what happens with corona in the future. It looks positive with regard to vaccines and so on, so we'll see. In summary, Q3 was good, very good in terms of sales, best in over a year. We have increased the company's speed by over 300 million, that is, what we have set in motion exceeds the value of what is completed with over 300 million, over 6.6 billion in the annual reserve. that will result in the future. We also have a good margin on this, over 21% as we have guided on, on this pipeline of 6.6 billion. And we have a bank, we have projects in these cities and areas we operate in. We are very positive about the future, in short. Da er jeg ferdig og klar for eventuelle spørsmål.

En spørsmål fra Jannik Huset. Ref slide med verdiskapingen i prosjekttiden. Hvordan blir fordelingen av verdiskapingen i verdikjeden mellom urban property og selvvågbolig?

The value chain is that the financial cost, which we usually have in a bank when we buy an empty house, is a little lower than the financial cost that we have to pay for urban property. We pay for urban property 3.75 plus 9 beds. So it is considered that this is the value chain considered urban property. Before Urban Properties, we bought empty at 12% margin, instead of 10% margin, and ended up with 20% margin at the end of the projects, compared to now, when I say 18% margin at the end of the projects. So this is considered Urban Properties.

From Simon Mortensen in DNB Markets, on slide 30, upcoming projects 2021-2023, have two of the four projects started in 2024. Are you not more than this ready to start in 2021-2023, that you must start in 2024?

Should I answer that? That's probably a mistake in the heading, if that's the way it is, Simen. We have projects, these were just some examples, we have a lot of projects we can publish, given that the market is there.

Then there are no more questions.

Flott. Takk for denne gangen. Da ses vi igjen i... Jo, det er et spørsmål til.

Fra Jonas Jensen. Blir det noe ekstra utbytte på omlag 10 millioner fra tomtebanksalget?

If there is an extra exchange, we have to look at that in Q2. No, in Q4, the exchange news will come. We are not talking about the exchange now. But of course, it is not unthinkable that there will be an exchange. I mean, we have to look at that. There will probably be an exchange. We have a tradition to relate to the exchange policy we have. We pay an exchange in the second half of the year that is greater than The second half, usually. Extra-large exchange rates, as you point out, in relation to what is left, after the Urban Property Deal, will come when it is reasonable. That is, the adjustment of the balance down to the level we want to be at long-term. We will work with that, but we will not take any chances to pay out irresponsible amounts of exchange rates.